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Fact check: How much do illegal aliens cost tax payers?
Executive Summary
Estimates of how much "illegal aliens" cost U.S. taxpayers diverge sharply because researchers measure different things: one line of work finds undocumented immigrants paid roughly $96–$100 billion in federal, state, and local taxes in 2022, while other analyses estimate much larger net fiscal costs when adding public service expenditures and counting U.S.-born children of undocumented immigrants. The variation stems from methodological choices — time horizon (annual vs. lifetime), which populations are counted, and which taxes and benefits are included — producing very different headline numbers [1] [2] [3].
1. Why Two Big Stories Clash: Taxes Paid Versus Net Costs
One set of recent studies emphasizes gross tax contributions, concluding undocumented immigrants contributed about $96.7–$97 billion in 2022, including roughly $25.7 billion to Social Security, much of which may never be claimed by these workers [1] [2] [4]. An opposing set of reports focuses on net fiscal impact, subtracting government spending on education, healthcare, welfare, and other services; this approach yields much higher net costs — for example, one advocacy group estimated a $150.7 billion annual net cost and an average per-person cost of $8,776 [3]. The clash is therefore not simply arithmetic error but differing scope and intent in the analyses [1] [3].
2. Recent Federal Analyses Highlight Short-Term Net Drains for New Entrants
Recent federal-focused work cited by advocates shows that migrants who entered during a specific period generated $10.1 billion in taxes while costing $19.3 billion in services, yielding a net drain of about $9.2 billion for that cohort according to a report synthesizing Congressional Budget Office data [5]. That calculation isolates a narrow arrival window and tallies short-term program costs like schooling and emergency care rather than long-run earnings and tax trajectories, producing a smaller, cohort-specific net deficit compared with lifetime-based assessments [5].
3. Lifetime and Demographic Differences Alter the Bottom Line
Research that estimates lifetime fiscal impact finds substantial heterogeneity: younger and more-educated immigrants typically pay more in taxes and use fewer transfer benefits over their lifetimes, producing net fiscal gains, while low-education immigrants and older arrivals often produce net deficits [6]. The Manhattan Institute’s work shows that education, age at arrival, and labor-market attachment are central determinants of whether an immigrant is a net fiscal contributor or a net cost over decades, meaning aggregate estimates mask important internal variation [6].
4. Who’s Counting What — Key Methodological Choices That Shift Results
Studies differ on inclusion criteria: some count only undocumented adults, others include U.S.-born children of undocumented parents, and some restrict analysis to state/local budgets versus federal accounts; these choices materially change results. For example, ITEP-style tax tallies focus on taxes actually remitted, producing a near-$100 billion figure in 2022, while FAIR-style accounting adds schooling, healthcare, and criminal-justice costs and includes dependents, pushing net-cost estimates far higher [2] [3]. Which public programs are included and over what time frame explains most of the discrepancy [2] [3].
5. Source Perspectives and Potential Agendas Shape Headlines
The major sources cited reflect distinct institutional positions: the Institute on Taxation and Economic Policy presents tax-contribution estimates that emphasize economic integration and revenue implications [2] [4], whereas the Federation for American Immigration Reform frames findings to emphasize fiscal burdens, producing markedly higher net-cost numbers [3]. The Manhattan Institute’s lifetime-approach provides a nuanced middle ground but still highlights winners and losers by education and age. Understanding each source’s orientation clarifies why they highlight different metrics and policy implications [2] [3] [6].
6. The Bottom Line: No Single “Cost” Number, Only Context-Dependent Estimates
The evidence shows two robust facts: undocumented immigrants contribute substantial tax revenue (about $96–$100 billion in 2022) and net fiscal impacts depend heavily on methodology, with short-term cohort accounting often showing deficits and lifetime accounting showing mixed results that hinge on demographic profiles [1] [2] [5] [6]. Policymakers and the public should therefore treat any single headline — whether a $97 billion contribution or a $150.7 billion cost — as conditional on explicit assumptions about populations, programs, and time horizons [1] [3].
7. What’s Missing and Where to Look Next
Available analyses illuminate many angles but leave gaps: there is limited consensus on standardized inclusion of U.S.-born children, on long-term labor-market mobility effects, and on federal versus state cost-shifting. A comprehensive, neutral federal estimate that reports both annual and lifetime impacts, disaggregated by age, education, and family composition, would reduce confusion. Until such a standard analysis is widely adopted, competing figures should be read as complementary but not directly comparable [6] [1].